Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

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STOCKHOLDERS' EQUITY
 6 Months Ended
Mar. 31, 2012
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
NOTE 7 — STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

On October 14, 2011 Beacon completed a private placement of 107 units (the "Series C-3 Units"), at a purchase price of $2 per Series C-3 Unit. Each Series C-3 Unit is comprised of (i) one (1) share of $1.5 Stated Value Series C-3 Convertible Preferred Stock (with each share having 125% nonparticipating liquidation preference, bearing cumulative dividends at a rate of 6% per annum payable quarterly in cash or additional Preferred Stock at the company’s option (but subordinate to the rights of the previously issued series of preferred stock) and convertible at the holder’s discretion into 3,333 shares of the Company’s Common Stock, at a conversion price of $0.45, and (ii) a five (5) year warrant to purchase 1,667 shares of its Common Stock (each, an "Investor Warrant") at a purchase price of $0.45 per share (collectively the "Series C-3 Offering"). Total proceeds from the placement were $160 and investors received an aggregate of 178,333 warrants.

 

For services performed in connection with Series C-3 private placements, Beacon issued 35,555 five year placement agent warrants with an exercise price of $0.45. Using the Black Scholes pricing model, the Company determined the fair value of the warrants to be $5.

The Company evaluated the conversion options embedded in the preferred stock securities to determine (in accordance with ASC 480 and ASC 815) whether they should be bifurcated from their host instruments and accounted for as separate derivative financial instruments. The Company determined the risks and rewards of the common shares underlying the conversion feature are clearly and closely related to those of the host instrument. Accordingly, the conversion features are being accounted for as embedded conversion options.

 

 The Company applies the classification and measurement principles enumerated in ASC 480 and ASC 815 with respect to accounting for its issuances of the preferred stock. The Company is required, under Nevada law, to obtain the approval of its Board of Directors in order to effectuate a merger, consolidation or similar event resulting in a more than 50% change in control or a sale of all or substantially all of its assets.

 

The Company evaluates convertible preferred stock at each reporting date for appropriate balance sheet classification.

 

Preferred Stock Dividends

 

Each share of preferred stock has voting rights equal to the equivalent number of common shares into which it is convertible. The holders of the Series A and Series A-1 are entitled to receive contractual cumulative dividends in preference to any dividend on the common stock at the rate of 10% per annum on the initial investment amount commencing on the date of issue. The holders of the Series B, C-1, C-2 and C-3 are entitled to receive contractual cumulative dividends in preference to any dividend on the common stock (but subject to the rights of the previously issued series of preferred stock) at the rate of 6% per annum on the initial investment amount commencing on the date of issue. Such dividends are payable on January 1, April 1, July 1 and October 1 of each year. Dividends accrued but unpaid as March 31, 2012, are $49, $86, $144, $32, $7 and $2 for Series A, A-1, B, C-1, C-2 and C-3 respectively.

 

Stock Options and Other Equity Compensation Plans

 

During the three months ended December 31, 2011, the Company’s Board of Directors authorized the grant of employee stock options to purchase an aggregate of 1,210,000 shares of common stock.  The options have ten year terms with vesting periods ranging from 1 to 3 years.  The Company calculated the $282 fair value of the options using the Black-Scholes option pricing model with the assumptions shown below.

 

During the three months ended March 31, 2012, the Company’s Board of Directors authorized the grant of employee stock options to purchase an aggregate of 1,628,750 shares of common stock.  The options have ten year terms with vesting periods ranging from 1 to 3 years.  The Company calculated the $380 fair value of the options using the Black-Scholes option pricing model with the assumptions shown below in the following table. Certain of the Company's options contain performance conditions. The fair value of these options has been measured but not recorded since determined to not be probable.

 

    For the Three     For the Six  
    Months Ended     Months Ended  
    March 31,     March 31,  
    2012     2012  
Stock Price   $ 0.29 - $0.31     $ 0.25 - $0.31  
Expected Life (range)     6.0 - 6.50       5.50 - 6.50  
Volatility     165% - 166 %     165% - 167 %
Risk-free interest rate     1.06 %     1.06 %
Dividend Yield     0 %     0 %
Fair value of options   $ 0.23     $ 0.23  

 

The Company recognized $185 and $190 of non-cash share-based employee compensation expenses as follows for the three months ended March 31, 2012 and 2011, respectively. For the six months ended March 31, 2012 and 2011, non-cash share based employee compensation expense was $368 and $369, respectively.

 

A summary of the status of the Company’s stock option plan and the changes during the six months ended March 31, 2012, is presented in the table below:

                Weighted        
                Average        
          Weighted     Remaining     Aggregate  
    Number     Average     Contractual     Intrinsic  
    Of Options     Exercise Price     Life     Value  
                         
Options Outstanding at October 1, 2011     3,684,696     $ 1.42                  
Granted     2,863,750       1.00                  
Forfeited     (604,183 )     (1.12 )                
Options Outstanding at March 31, 2012     5,944,263       1.30       8.57     $ -  
                                 
Options Exercisable at March 31, 2012     1,953,505     $ 1.22       7.49     $ -  

 

As of March 31, 2012, there was $609 in unamortized share-based compensation cost. This cost is expected to be recognized over the remaining weighted average vesting period of approximately 6 years.